Quote from: oscarzululondon on June 18, 2012, 10:07 pmQuote from: Kappacino on June 18, 2012, 06:49 pmWhat would you say to the idea that if Greece left the euro, after a brief period of difficulty, tourism would increase, investment as well as innovation would increase as people made products in order to beat expensive imports etc in order to start on a slow road to recovery, yet if they stay in the euro, there will only be more bailouts (Spain/Italy/Ireland etc) and ultimately this will lead to exhausting the monetary supply of Europe as well as causing a continent wide financial crisis?In all seriousness that's the core issue "a brief period of difficulty".Argentina is still suffering decades later, it isn't a 'brief period'. Greece would have no money, little income in the form of tax, no more instant cash from other EU countries including Germany, they would have nothing to kick start growth. The period of deflation could be 40 years or more (look at Japan, that's not unrealistic). It's not like they've got huge amount of natural resources they could sell or license off and tourism is worth relatively little to such a large country with large population.People talk about them being able to devalue their new currency if they left the Euro, but devalue it to do what? Sell more Greek Yoghurt? It's going to take decades and century's for them to build up either a new manufacturing base, or perhaps quicker for them might be to build a technology base, but in that respect their whole language works against them.My own opinion is that we need a federal states of Europe whereby the poorer states get permanent yearly funding from the wealthier states like as happens in America. It's ridiculous that the French get a farming subsidy from the EU when the Greeks are in the situation they are in. Personally I love the idea of a United States of Europe, we'd have the largest Army / Navy / Airforce in the world, we'd have the most diplomatic clout in the world, be one of the largest if not the largest country in the world, be the wealthiest country in the world, the Euro would almost inevitably become the world's reserve currency eventually, we'd have huge amounts of nautral resources, an incredibly well educated and innovate population etc etc. I think other powerful countries have a vested interest in us not uniting.It's time to choose, all or nothing.It's a nice idea as I think at the moment we have all the downsides of a Federal Superstate without any of the advantages - richer countries like Germany, the UK and France are already propping up the teetering economies of Ireland, Spain and Greece but cannot legislate against exactly what has happened just now in Greece - a shift in the balance of power which puts the future of any recovery package in doubt.What then is the solution? I don't claim to be an expert but if we did have a European government with the balls to get Greece to toe the party line I would suggest focusing on credit easing whereby the money supply is increased but instead of being used to buy up so-called government bonds (i.e "Print More Money!" it's used to buy corporate bands, securities (especially mortgage securities) and so on - I think this would be more likely to get Greece out of the mire by encouraging loans to small businesses but I should say a) I'm not an Economist and b) The latest package from the EMF does contain a component of credit easing apparently so it seems someone else thought of this first!V.